TaxTMI 
TaxTMI 
2001 (10) TMI 1126
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....chase turnover of raw rubber latex by the assessee since the assessee was liable to tax on the purchase value of raw rubber latex used for centrifuging. The assessing authority relied on a decision of this Court in Padinjarekkara Agencies Ltd. v. Assistant Commissioner (1996) 2 KLT 641, in support of the addition. The contention of the assessee that the said decision was not applicable, was overruled by the assessing authority. 2.. The assessee went up in appeal before the Deputy Commissioner (Appeals), A.I.T. and S.T., Ernakulam. It was contended on behalf of the assessee that centrifuged latex being a last purchase of the taxable commodity, the inclusion of its sale value in the turnover was against law. It was also contended that both rubber latex and the centrifuged latex fell under sub-clause (a) of entry No. 110 of the First Schedule to the Kerala General Sales Tax Act, 1963 and hence both of them should be taken as one commodity liable to tax at one point only. Since the assessee had sold the centrifuged latex locally and filed declarations in form No. 25, the assessee was not liable to pay tax since the assessee was not the last purchaser in the State. The Deputy Commiss....
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....e Tribunal was justified in law in holding that raw rubber latex and centrifuged latex are two different commercial commodities for levy of sales tax under item 161(a) of the First Schedule to the Act and whether on the facts and in the circumstances of the case the Appellate Tribunal was right in law in holding that levy of sales tax on purchase turnover of raw rubber latex is sustainable in law. 3.. The main contention of learned counsel for the assessee was that the said decision in Padinjarekkara Agencies' case (1996) 2 KLT 641, was not relevant in construing the scope of entry 161 of the First Schedule to the Act as it stood during the relevant assessment year. According to the counsel, that decision was rendered in the context of section 5(7) of the Act and the question was whether centrifuged latex was a finished product within the meaning of section 5(7) of the Act. No doubt, the decision was in the context of section 5(7) of the Act as then stood. But the clear ratio of the decision is that by converting rubber latex or latex purchased from the planter and making centrifuged latex out of it involves a process of manufacture and that the centrifuged latex obtained at the e....
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....stated by the Supreme Court in Telangana Steel Industries case [1994] 93 STC 187 as quoted above, it has to be held that the argument raised on behalf of the assessee based on the fact that both the products can come under entry No. 161 of the First Schedule to the Act and hence they cannot be taxed separately cannot be accepted. 4.. We may now refer to the decision of the Supreme Court in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319. The said decision was rendered by four learned Judges of the Supreme Court. In that decision their Lordships held as follows: "Entry No. (iv) in section 14 of the Central Sales Tax Act, 1956, as originally worded (prior to its amendment by Amendment Act 61 of 1972) was meant to enumerate separately taxable goods and not just to illustrate what was just one taxable substance, viz., 'iron and steel'. Each sub-item in entry No. (iv) is a separate taxable commodity for purpose of sales tax and each of them forms a separate species for each series of sales although they may all belong to the genus, 'iron and steel'. Therefore, manufactured goods consisting of 'steel rounds, flats, angles, plates, bars' or similar goods in other forms and s....
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.... the view expressed by the learned single Judge in Padinjarekkara Agencies case (1996) 2 KLT 641 on this aspect. 5.. In this context we may notice that a division Bench of this Court in Commissioner of Income-tax v. Kanam Latex Industries P. Ltd. [1996] 221 ITR 1; (1996) KLJ (TC) 210 has held that centrifuged latex is commercially a different product from raw rubber latex (field latex). Therein their Lordships referred to the various decisions of the Supreme Court and followed the decision in Empire Industries Limited v. Union of India [1987] 64 STC 42 (SC); [1986] 162 ITR 846, and noted that if after undergoing process and emerges as a commercially different commodity with its own price structure, custom and other commercial incidents it would be partaking the characteristics of manufacture, including incidental or ancillary processes in the direction of the final product. It may notice that the manufacture of centrifuged latex from field latex is done with sophisticated machinery installed at great cost and the emerging product on manufacture has entirely different commercial identity and its own price structure thus clearly establishing that field latex when converted into cent....